In a closely watched decision, the Montrose City Council voted 3-2 on Tuesday evening to deny a liquor license for the south City Market at 16400 S. Townsend Ave. The discussion, while it centered on a single liquor license, reflected local debate over grocery stores selling alcohol and also broader statewide tensions surrounding changes brought about by Proposition 125, which legalized beer and wine sales in grocery stores in 2022.

City Market sought approval for a liquor-licensed drugstore permit that would have allowed the store to sell spirits alongside beer and wine. For the license to move forward, two existing liquor licenses needed to be transferred, including that of Corks Fine Wine & Spirits, a neighboring store that recently closed after 26 years in business. Corks cited increased competition from City Market, following the legalization of grocery store wine sales, as a key factor in its closure.

City Market was seeking a liquor-licensed drugstore permit under Colorado law, which requires the transfer of two existing liquor licenses within the same municipality for approval. In this case, the licenses that would have been transferred were those of Corks Fine Wine & Spirits and Drive-Thru Liquor, both of which closed since the Prop 125 law went into effect.

Corks Fine Wine & Spirits, located next to City Market, just recently shut its doors after 26 years in business, citing stiff competition stemming from the grocery store’s beer and wine sales. Drive-Thru Liquor, another long-standing business, closed shortly after the law went into effect.

Council Divided Over Approval

The council was split on the issue, with members Ed Ulibarri, Judy Ann Files, and Doug Glaspell voting against the license, and Mayor J. David Reed and Councilman Dave Frank voting in favor.

Opponents of the license emphasized local voter sentiment and concerns over public safety. Files pointed to the 2022 Proposition 125 vote, where Montrose residents overwhelmingly rejected the measure to allow wine in grocery stores. “We voted on Proposition 125 in 2022. Our community voted no that we didn’t want liquor (beer or wine) in grocery stores. I take that as their choice,” she said.

In 2022, voters were asked whether grocery stores should be allowed to sell beer and wine. The proposition passed statewide, but Montrose County voters were overwhelmingly against it, 11,192 voting against and 8,946 voting in favor.

Ulibarri cited public safety and the potential for increased access to alcohol by minors as reasons for his opposition. Glaspell did not provide any comments on the issue during the meeting but joined the opposition vote.

On the other side, Reed and Frank argued that the council’s role as Montrose’s liquor licensing authority is limited by state law, which requires decisions to be based on the “needs and desires of the community.” Reed expressed frustration with the arguments presented against the license, calling them inconsistent. “I don’t remember a liquor license ever having been denied since I’ve been in this community,” he said. “I do think it’s important to note that at least a couple who testified have in recent times been associated with or part of an applicant that was awarded a liquor license. They said the community needed it. And now all of a sudden, the community is overrun with liquor stores? I don’t get it.”

Frank supported Reed’s position, emphasizing that economic competition or concerns about safety are not valid reasons to deny the application under Colorado liquor laws.

“I honestly cannot see any reason presented as evidence to deny the application. We are bound by (the needs and desires) of the community,” he said.

Frank also highlighted that consumers ultimately hold power through their purchasing decisions.

“You have the ability to buy from any liquor store you choose to. I buy from smaller, local liquor stores,” he said.

Community Opposition and Support

Community sentiment was divided, with petitions circulated both in favor of and against the liquor license.

City Market gathered 115 signatures in support of their application, compared to just 9 opposing. However, an opposition group, largely comprised of local liquor store owners and their supporters, collected a significantly higher number of signatures. Of the 741 total signatures they gathered, 557 were valid, with 184 deemed insufficient, primarily because the signers lived outside Montrose city limits. Those signatures opposed the liquor license.

The council also received letters from the opposition group. Local liquor store owners and a craft distiller out of Telluride opposed City Market’s application.

Sophano Kan and Fangling Kousoum, owners of Palace Liquor and The Pour House, described the challenges small businesses have faced since the passage of Proposition 125.

“The corporate greed is making it near impossible to compete with the price point,” they wrote in a letter to the council. They argued that allowing City Market to sell spirits would deal a final blow to already struggling independent stores. “Liquor businesses will be unexpectedly impacted or on the brink of closing the door one by one,” they added, citing the closure of Corks Fine Wine & Spirits as a cautionary tale.

Joanna Smith, owner of Telluride Distilling Company, highlighted the impact of grocery store alcohol sales on Colorado’s craft distilling industry.

“Small business liquor stores cannot compete, and we’ve seen hundreds of vendors having to close their doors across the state,” she wrote.

Smith emphasized that local distilleries rely on small liquor stores to carry their products, and the expansion of alcohol sales in grocery stores has created an uneven playing field. “Proposition 125 has negatively impacted this industry to where we may never recover,” Smith wrote in the letter.

Justin Tubbs is the Montrose Business Times editor. He can be reached by email at justin@montrosebusinesstimes.com or by phone at 970-765-0915 or mobile at 254-246-2260.